Home >Companies >News >Qualcomm walks away from $44 billion NXP bid, will buy back $30 billion of shares

Beijing/San Francisco: Qualcomm Inc walked away from a $44 billion deal to buy NXP Semiconductors after failing to secure Chinese regulatory approval, becoming a high profile victim of a bitter China-US trade spat.

The world’s biggest smartphone-chip maker and Netherlands-based NXP confirmed in separate statements on Thursday that the deal, which would have been the biggest semiconductor takeover globally, had been terminated.

The collapse of the deal is likely to aggravate tensions between Washington and Beijing, damage China’s image as an antitrust regulator and discourage deals that need Chinese approval to go through, people aware of the matter have said. “I’m very disappointed that they didn’t get regulatory approval," US treasury secretary Steve Mnuchin told CNBC in an interview. “Unfortunately, I think this is another example of where it was approved in every single other territory. We’re just looking for US companies to be treated fairly."

Qualcomm had said on Wednesday that it would drop the bid for NXP, unless a last minute reprieve from China was received. There was no word from China’s State Administration for Market Regulation, the antitrust regulator reviewing the deal, after the deadline for the deal to expire passed. “We obviously got caught up in something that was above us," Qualcomm chief executive Steve Mollenkopf said in an interview after the announcement on Wednesday.

Qualcomm was due to pay NXP a long-agreed breakup fee of $2 billion by 9am eastern time and the Dutch chipmaker said it would buy back $5 billion worth of shares. Qualcomm’s board on Wednesday raised its own repurchase authorization to $30 billion.

The deal was announced in October 2016, just days before the election of US President Donald Trump and was awaiting Chinese approval even as a trade dispute between US and China intensified and the two countries clashed on issues such as ownership of technology and patents. The Trump administration played an outsized role in Qualcomm’s fate and there had been expectations that the lifting of a ban on US chipmakers doing business with China’s ZTE Corp would clear the way for the NXP deal. Qualcomm needed approval from China because the country accounted for nearly two-thirds of its revenue last year. The Chinese commerce ministry declined on Thursday to comment on whether the deal was approved.

“According to my understanding, the case was an anti-monopoly issue, and not related to China-US trade friction," ministry spokesman Gao Feng said at a regular news conference. reuters

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